The Committee asked me to address in writing
their final question, which was sent to me as:

Q: Assuming climate change is real and serious,
and given the very long list of non-carbon or low carbon technologies
available or nearly available, what do governments, including
ours, have to do to make the seemingly very large push needed
to get the transition to low carbon moving? Or is this really
an issue for industry and for ordinary citizens to change their
behaviour without relying on government so much?

I have seen no evidence that a fundamental problem
of "global public goods" such as mitigating climate
change can be addressed primarily through private or corporate
actions without a significant role for governments. Undoubtedly,
some progress can be made through the combination of general public
concern operating in a privatised system, for example people willing
to pay a small premium on their electricity bills to buy from
renewable energy providers. However, the take-up of such schemes
remains very modest (arguably a rational reaction, since individual
contributions are insignificant in the absence of wider societal
actiona classical problem of collective action).

Also, there is considerable variation in the
degree to which companies are acting on climate change. However,
it is notably that the most forward-looking companies on this
issue have also been amongst those most openly calling for government
regulation, since by their nature, their prime responsibility
has to be to their shareholders and they cannot therefore bear
significant costs unless their competitors are also required to
do so.

In delivering energy efficiency, its apparent
cost-effectiveness would appear to give more scope for unilateral
actions. However in practice, both survey work and barrier analysis
conducted by the Carbon Trust does indicate that effective delivery
still requires a combination of regulatory and support measures.
With the exception of energy intensive companies, for many others
energy costs remain below the threshold of "don't know and
don't care", treated as an unavoidable operational cost rather
than as an assessed procured good. Without regulatory driverssuch
as the CCL/CCA package and mandatory energy efficiency labelling
and/or standards, most such companies remain indifferent to both
climate and energy cost considerations, and may well not even
draw upon support available. Conversely, without support (to increase
their access to relevant information and services at minimum transaction
cost), most companies cannot respond in the most efficient way
to regulatory drivers.

I also wish to recall the section of my written
evidence on the topic of innovation, and in particular the observation
that:

The energy sector, and in particular utilities
and buildings, are regulated sectors with exceptionally low inherent
innovation. The bulk construction industry is notoriously conservative,
also the utility industries are less than a tenth as R&D-intensive
as sectors like information technology or pharmaceuticals. New
technologies do not offer the marketing incentive of product differentiation
(insulation, or new generation technology, does not change the
product that final consumers see). We are seeking radical innovation
in sectors which have been dominated by the same basic set of
technologies for at least half a century. Furthermore, they are
regulated sectors in which regulation does not reward, and may
deter, innovation.

Whilst measures that help to "internalise"
carbon-related damages, such as cap-and-trade systems, can help
promote the use of technologies that already commercialised and
close to being economic, is naive to believe that thiseven
combined with traditional R&D and patent protectioncan
unlock major innovation-related investments in such sectors, where
numerous existing barriers to innovation are compounded by the
uncertainty and political risk about future carbon prices.

Thus in my view, in addition to measures such
as the EU ETS, there is an important role for government in fostering
innovation in low carbon technologies, again with a core need
to get the right balance of support measures (eg funded RD&D,
technology incubators, etc) together with regulatory drivers targeted
at building up commercially viable low-carbon-technology industries
at scale (such as incentivised markets for renewable energy).

The Committee's Question, "what do governments,
including ours, have to do to make the seemingly very large push
needed to get the transition to low carbon moving?" is a
very big question, to which I have given some broad reactions.
If there is interest in mores specific instrumental assessments,
I could offer more detailed input drawn from my roles as both
coordinating the "System Evolution and Incentives" part
of the Research Council's SuperGen initiative, and also in my
role overseeing the Carbon Trust's current assessment of options
for reform of the UK Climate Change Programme. But my understanding
of the Committee's brief, and specific question, was at the higher
level, and I have sought to address my remarks accordingly.

I hope that this addresses your request and
that my evidence overall has offered a useful contribution to
the Committee's deliberations,